IT companies like TCS, Infosys, Wipro and HCL Tech likely to report muted growth for March quarter

India's top four information technology players are likely to report muted growth in sales and net profit for the March 2013 quarter.

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India's top four information technology players are likely to report muted growth in sales and net profit for the March 2013 quarter due to seasonally weak demand — with clients in the process of finalizing their IT budgets — and range-bound currency movement sequentially. Given this scenario, IT vendors will find it difficult to post a better growth than what they had reported in the previous quarter.

For the four top players — TCS, Infosys, Wipro and HCL Technologies — aggregate revenue is expected to grow 2.2% for the March 2013 quarter, compared with 3.6% in the previous quarter.

Net profit growth for the quarter is expected to slow down to 1.6% from 2.8%. Among the four, HCL Technologies is expected to report relatively better performance. Its revenue and net profit are expected to sequentially grow 3.2% and 2.4%, respectively for the three months to March 31, 2013, the third quarter of its fiscal year.

TCS, the country's largest IT exporter, is expected to grow revenue sequentially by 2.4% and net profit by 1.7%. Investors will be keen to know whether Infosys would be able to surprise the markets once again, after reporting a strong sequential revenue growth of 5.7% for the December 2012 quarter. The company is likely to report a 1.8% increase in top line and 2% increase in net profit for the March quarter.

Last week, Gartner marginally lowered its full-year forecast for IT services growth to 4.5% for 2013 from its earlier estimate of 5.2% growth. The international technology research firm reduced its forecast citing persisting hesitation among global clients to take payment against the dollar in the coming quarters will also be crucial for IT exporters.

Some economists expect the rupee to top 60 against the dollar by the end of 2013. If that happens, realisations of IT players would improve even if the growth of their dollar denominated revenues tapers.

For the March quarter, the rupee remained range-bound against the dollar on a sequential basis. Thus there will not be much foreign exchange benefit for exporters.